Asian markets on Wednesday received a boost from Chinese technology stocks and the reopening of the world’s second-largest economy, but concern was regaining control in Europe over an economic slowdown amid tighter monetary conditions.
Chinese markets buoyed by Wall Street and technology stocks on hopes that Beijing’s long takeover of the sector is coming to an end. Shanghai gained +0.7% and Hong Kong is up more than 2% in recent trading before the close. The Tokyo Stock Exchange signed the fourth consecutive session of increase (+1.04%), and it is still driven by the decline of the yen.
After opening slightly higher, European indices fell 0.26% in Paris, 0.13% in Frankfurt, 0.30% in Milan and 0.11% in London around 07:45 GMT. “The mood remains highly volatile, subject to fluctuations in inflation expectations amid concerns that central banks may overreact to address price hikes and pose risks to economic growth.Michael Hewson, analyst at CMC Markets notes. Investors will have to wait until Friday to see if the CPI for May will confirm the hypothesis of slowing inflation in the US. They will then have to wait until next week for the outcome of the US Federal Reserve meeting, when the market has already priced in sharp increases in key rates at the next two meetings in June and July.
India’s central bank, on Wednesday, raised interest rates by 0.5% for the second time in two months, the third largest economy in Asia suffering from high inflation rates due to the war in Ukraine. Investors are also preparing for the exceptionally scheduled European Central Bank meeting on Thursday in Amsterdam, which is supposed to start a historic turning point after years of cheap and abundant money policy. The European Central Bank is expected to decide on Thursday to halt its net debt purchases, which have supported markets so far. It should then start a cycle of major interest rate hikes in July, but the extent of monetary tightening remains unknown.
Technology celebrates in China
China has granted new licenses to video games for the second time this year after a months-long freeze in the world’s largest market, a decision seen as a positive sign for technology shares that jumped on the stock market on Wednesday. Tencent and NetEase shares rose more than 5% at the end of the session on the Hong Kong Stock Exchange. And the shares of e-commerce company Alibaba, which was the first to suffer from the punishment of the authorities, rose by more than 10%.
Inditex index jumps after rising profits
Spanish clothing giant Inditex, owner of the Zara brand, posted a net profit of 80% in the first quarter, despite closing its stores in Russia due to the war in Ukraine. The movement was up more than 4% in early trading, following this positive sign of the consumption situation in Europe.
Warning from Credit Suisse, which is witnessing a decline in the stock market
The number two in the Swiss banking sector said he expects a potential loss for his investment bank in the second quarter, but also for the entire group. The movement was down more than 6% at around 07:30 GMT in Zurich.
On the side of oil and currencies
Oil rose further, the price of a barrel of North Sea Brent crude rose 0.61% to $121.31 around 07:40 GMT and the price of a barrel of US West Texas Intermediate crude rose 0.58% to $120.10. In the wake of higher oil prices, the dollar continued its rally against the Japanese currency, with the dollar now clearly trading above 133 yen, a new 20-year high. But the European currency fell 0.18% against the dollar, at a rate of one euro against 1.0684 dollars around 07:40 GMT. Bitcoin fell 2.85% to $30,441.